In light of the pension changes, you need to consider this
Years ago you might have expected to work into your mid-60s, then retire to live on a government pension. But those days are getting closer to extinction; times have changed – life expectancy is rising and taxes will no longer be a sustainable means of supporting an ageing population.
Recent changes mean that not everyone will receive the pension, only those who are most in need. But what does this mean for you? It’s your future, your money and your retirement – so take control of your superannuation.
1. Make sure you understand how much you need to accumulate to support yourself (and partner) in retirement.
You can use online calculators to help you figure out what sort of retirement lifestyle you can expect to end up with based on your projected superannuation when you reach preservation age.
You could also find an “income replacement” formula which will calculate how much money you’ll need in retirement as a percentage of your salary, based on the average for people your age, and share your income and martial status.
2. Learn what your superannuation charges to invest your money and what their competitors offer.
Even a difference in one per cent can be significant in the long run. There’s also differences in life insurance offers, or whether financial advice is included in the fees charged for your superannuation account, so do your homework and ask your financial advisor for a cost benefits analysis.
Make sure you know what the difference is for investment options with your fund and which you should be in. A mix of funds is the best bet, but you should speak to a financial adviser about what is right for your needs.
3. Implement a plan.
Speaking to a financial planner will help you form a plan that ensures your assets are tax-efficient. They can also help you with more complex calculations depending on your personal circumstances.
Most importantly, your financial planner will be able to help you decide on a plan and review it as your life changes over time. Even making small, regular contributions will help set you up for a more comfortable retirement.
4. Don’t wait until tomorrow.
The sooner you start, the better it is for your future.
Related links:
Why are a record number of Aussies accessing super early?
Have you accounted for super in your will?
Is your super fund performing as best it can for you?